Staring at a another debt ceiling crisis, the president's punishing the one
credit rating agency that dared downgrade U.S. debt in the last crisis.
And Wall Street analysts say the timing's no coincidence.
Just weeks away from the next debt-limit showdown, the Justice Department
filed a whopping $5 billion lawsuit against Standard & Poor's for alleged
The case appears weak, but the message it sends S&P and the other
independent rating agencies is clear: Don't downgrade anymore.
"It's a foregone conclusion that no more downgrades will be coming," said
Euro Pacific Capital CEO Peter Schiff.
Curiously, Attorney General Eric Holder can't explain why the administration
is targeting only S&P in its unprecedented investigation of Wall Street's
credit rating industry.
S&P's subprime securities ratings were virtually identical to those of
Moody's and Fitch, yet the government's singling out S&P for
The reason seems obvious: Unlike Moody's and Fitch, S&P embarrassed
President Obama ahead of his re-election bid by downgrading U.S. debt to AA+
The shocking 2011 reduction in the rating quality of Treasuries was the first
in U.S. history.
Even so, S&P said it was justified based on the Band-Aid the
administration stuck on the huge debt problem, one that now only looms
At the time, Obama was quick to slam S&P's decision.
Now many observers say he's getting even by shaking down S&P for billions
in subprime securities losses at federally insured financial institutions.
"Given the circumstances and timing of the suit, can there be any doubt that
S&P is paying the price for the August 2011 removal of its AAA rating on
U.S. Treasury debt?"
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